More and more, while still tentative, the answer looks to be ‘yes.’ Real estate makes up less of the world’s No. 1 economy than it did before the subprime mortgage market collapsed, causing the worst financial crisis and global downturn since the Depression. Nonetheless, a recovery in housing is enormously important, because as long as home prices are falling or stubbornly low, there’s a limit to consumers’ confidence about their financial well-being, and consequently to the demand that companies need to see before they increase hiring, which leads to more consumer demand, which spurs more hiring, et cetera. You get the point.

The latest figures from the closely watched S&P/Case-Shiller index of property values, released Tuesday, add to glimmers of hope in recent months that the U.S. housing market is mounting a comeback.

Home prices in 20 major U.S. cities fell from a year earlier in March, but by just 2.6 per cent – the slowest year-on-year pace since December, 2010. On a quarterly basis, home prices nationwide dropped in the first quarter from a year earlier, too, but by 1.9 per cent compared with an almost 4-per cent annual drop in the final three months of 2011.

Plus, although the economists who created the index, Karl Case and Robert Shiller, both say the year-on-year measure is a better gauge of trends than comparing gains or drops from one month to the next, home values in the cities rose (on a seasonally adjusted basis) for the second consecutive month.

Okay, the gain was just 0.1 per cent, following a 0.2 per cent gain in February. But according to Jonathan Basile, director of economics for Credit Suisse in New York, the two-month increase is the first since the Obama administration’s popular home buyer tax credit expired in 2010.

The credit was introduced in the thick of the crisis (initially for first-time buyers but later broadened) to entice Americans to help reduce the glut of properties on the market. The fact there are now back-to-back gains suggests housing is breaking a familiar pattern that’s been evident throughout the U.S. rebound, where stimulus of one form or another artificially kick-starts an aspect of the economy for a period, with some of the gains being snuffed out when the measure expires.

Don’t pop the champagne just yet, but it looks like the housing market is in the very early stages of a recovery that’s less dependent on government aid.

The Case-Shiller index follows a report last week from the U.S. Federal Housing Finance Agency, which found prices across the country actually gained in 12 months through March, the biggest annual increase in more than five years. Sales of new and existing homes are also rising.

But here’s why there’s reason to temper your enthusiasm. Housing is still enormously dependent on monetary policy stimulus, in that record-low borrowing costs are pushing mortgage rates down. (Freddie Mac, one of the two housing-finance agencies in the U.S., reported last week that 30-year home loans were going for 3.78 per cent last week – the lowest since the early 1970s.) That’s fine, in a sense, since interest rates in the U.S. could stay this low for years.

At the same time, borrowing costs are that low in part because the recovery in housing, like in other sectors, is very uneven. The real-estate market in some of the cities that were hardest-hit by the financial crisis, such as Phoenix, is booming of late. But in others, like Atlanta, prices are still plunging. (In fact, 13 of the 20 cities in the Case-Shiller index had a year-on-year drop; Phoenix rose 6.1 per cent, the biggest gain, while Atlanta plummeted 18 per cent.) Still, while cities like Atlanta, Chicago and New York are still seeing weakening prices, Phoenix, Miami, Dallas, Minneapolis and Tampa have all seen four or more consecutive monthly gains, BMO economist Jennifer Lee pointed out.

Unfortunately, the Conference Board’s index of consumer confidence for May, also released Tuesday, suggests that gains linked to an improved housing market may be offset by lower stock prices and the parade of scary headlines coming from Europe.

“All in, this – an increase in home sales and fewer homes available, or more demand and less supply – is certainly a promising development,” Ms. Lee said in a note to clients. “But the focus of U.S. consumers is quite likely elsewhere right now.”

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